30 | The Panama Papers

The Panama Papers were the scandal the world had to have. The US was already two years into FATCA. And Australia deep into the implementation of CRS. It was as if the Panama Papers were to confirm the urgency with which things had to change. To show that Lichtenstein wasn’t a one-off. The Paradise Papers a year later just confirmed that point, in case there were any doubters.

The Panama Papers

At the centre of the biggest data leak in history is the law firm Mossack Fonseca in Panama – which is why the Panama Papers are also often called the Mossack Fonseca Leaks.

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Founders

It all started way back in 1977 when Jürgen Mossack, a German lawyer, founded the Mossack Fonseca law firm in Panama. At the time, he probably had no idea that this firm would one day make him famous. And land him in prison. The Panamanian novelist/lawyer Ramón Fonseca joined the firm in 1986. Swiss lawyer Christoph Zollinger joined later as a third director.

Offices

The firm grew quickly and with time established nine offices in China, Latin America, United States, Europe and Switzerland. Shortly after Ramón joined, the firm started operations in the British Virgin Islands (BVI) and incorporated more than 100,000 BVI companies over the following 30 years.

Leaks

In 2015 an anonymous source took 2.6 terabytes of the firm’s client records and sold them to the German newspaper Süddeutsche Zeitung. In total the data contained 11.5 million documents. Revealing financial and legal information about more than 214,488 offshore entities set up by the firm. They contained personal financial information about wealthy individuals and public officials. And they linked some of the Mossack Fonseca shell corporations to fraud, tax evasion, and the circumvention of international sanctions.

Journalists

Süddeutsche Zeitung passed the data to the International Consortium of Investigative Journalists (ICIJ).

The ICIJ is an independent international network of more than 200 investigative journalists in over 70 different countries. Based in Washington DC the network has been collaborating on issues such as “cross-border crime, corruption, and the accountability of power” since February 2017.

Given the sheer volume of data and the work required to validate the authenticity of the data, the ICIJ enlisted reporters and resources from The Guardian, the BBC, Le Monde, Sonntags Zeitung, Falter, La Nación, German broadcasters NDR and WDR, Austrian broadcaster ORF and many others. The ICIJ facilitated the research and document review, while reporters from these media outlets – working in 25 different languages – reviewed the documents.

Findings

The leaked documents incremented many known names in politics, sports and art. Not every transaction pointed to an illegal undertaking. But many strongly suggested tax evasion, corruption or fraud. Some extremely wealthy entities and individuals of some of the world’s poorest countries had used Mossak Fonseca entities to hide assets. Other offshore shell companies broke exchange laws and violated trade sanctions.

The documents named 12 current or former world leaders, 128 other public officials and politicians. And it named hundreds of members of the elites in over 200 countries. Gerard Ryle, director of the ICIJ, called the leak “probably the biggest blow the offshore world has ever taken”.

Arrests

On 12 April 2016, the Second Specialized Prosecutor against Organized Crime in Panama raided Mossack Fonseca and searched their Bella Vista office. But no charges were laid. However, ten days later the same unit raided another Panama location and “secured a large amount of evidence.”

The Municipality of Regulation and Supervision of Financial Subjects in Panama then initiated a special review of the law firm. After a year long investigation, Mossack and Fonseca were arrested in Panama City on 8 February 2017 on money-laundering charges.

Vladimir Putin

Vladimir Putin is the most prominent name among the Panama Paper royalty.

Putin’s best friend Sergej Roldugin, a violist and godfather of Putin’s eldest child, appears prominently in the Panama Papers. According to the leaked papers, Roldugin is the 3.9% owner of Bank Rossiya and various offshore international business companies (IBC). He received transfers from various Russian conglomerates. And he acquired assets worth over $100 million.

John Stevens

John Stevens is the least prominent name among Mossack Fonseca’s clients. But the most typical case. He ran a Zimbabwean Safari business making about USD 250,000 per year. The business traded through an IBC registered in the British Virigin Islands with a bank account for IBC on the Isle of Man.

And then again

The Panama Papers shocked the world. And then a little more than a year later, another leak followed – the Paradise Papers.

The two papers have many things in common – the involvement of Süddeutsche Zeitung and the ICIJ – the cooperation of hundreds of journalists worldwide – the entity structures they brought to light.

But they are also quite different. The Paradise Papers were a much smaller leak – half the size of the Panama Papers. The leak originated from a reputable law firm called Appleby. Incremented a very different group of entities – the high end of town. And the Appleby leaks didn’t point to crime and tax fraud the way the Mossack Fonseca leaks did.

Paradise Papers

The German newspaper Süddeutsche Zeitung acquired the Paradise Papers. And then shared these with ICIJ. Just as they had done with the Panama Papers.

Just as before, ICIJ involved over 100 media partners using Neo4j, a graph-database platform made for connected data, and Linkurious, graph-visualization software, to analyse the data. And then on 5 November 2017 the consortium started to release information, just as they had done with the Panama Papers.

The Appleby data incremented more than 120,000 people and companies. From Prince Charles and Queen Elizabeth II over President of Colombia Juan Manuel Santos toU.S. Secretary of Commerce Wilbur Ross. From Facebook, Twitter, Apple, Yahoo! over Disney, Uber and Nike to Walmart, Allianz, Siemens and McDonald’s.

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